Some of the latest financial innovation ideas have come about rapidly and are too big for even Global Tier-1 Banks to tackle on their own. FISPAN’s value proposition of embedding your bank’s products deeply into your client’s domains is rapidly becoming mission-critical, especially with the rapid digitization that has arisen from the global pandemic. The challenge for banks is to decide whether partnering with a fintech such as FISPAN, is the right solution to the problem versus building your own solution (either internally or contracting some outsourced solution developer). The short answer is that you most likely will regret building, owning, and operating your own suite of ERP connectors. Below is a slightly more thoughtful list of considerations that will help you navigate through this decision.
How efficiently can you get to market (if at all)?
We have all heard stories about enterprise software projects going massively over budget (45% of projects) and failing to deliver value (only about 56%) according to McKinsey. The stories only get worse if you focus on projects involving digital banking experiences. A study by Forrester and Avoka shows how many large IT projects at enterprise banking and financial services firms get delayed, overrun, and even more disappointingly fail to deliver the business value promised.
The survey indicates that most projects have much longer lead times than expected and that missing on spend is often coupled going massively over budget. A small 12% of projects were recorded to be on or under budget, 45% of projects blew their budgets by at least 25%. Only 3% that went over their delivery date were on or under budget. If you choose to develop internally, odds are you will be over-budget and past your target delivery date.
Additionally, projects that run overtime are less likely to have frequent updates, on average ⅓ of software releases are updated once a year or less, closer to half (42%) if the project took longer than expected. Instead of updating software, teams are spending the majority of their time fixing bugs and managing dependencies. Without frequent and crucial updates to your software, the value of your project takes a major hit.
We have seen this scenario time and again when it comes to software projects. As a company FISPAN is now in its fourth year, and I have started to see some of those early build vs. buy decisions from our early prospects play out. Let’s just say the results are consistent with what Forrester and Mckinsey had predicted.
When you start breaking down the major drivers of a failed software project, an inordinate amount of blame tends to fall on some failure to properly scope the project in terms of vision, customer needs and potential constraints.
In addition to the difficulty of properly staffing the program with the correct combination of skills required, those risks can also be increased in a domain area like embedded/ERP banking. A team needs to have an understanding of the nuances of client ERP Systems, Bank legacy systems, Treasury Banking, Accounting Workflows, Banking Workflows and be able to deliver a program that can add value within all of those different constraints. Not only will most banks and contracted partners be unlikely to already possess these perspectives, it will be hard to get the right people working on these initiatives at the same time.
Our platform is out-of-the-box SaaS and we have invested heavily in tooling that allows us to connect to your payments and data systems, leveraging your existing connectivity channels. We can get into the market and learn from your bank’s clients within weeks as opposed to the years it can take to build it in-house. Because FISPAN is not an IT project, you are relying on our hundreds of sprints and investment in user analysis and development. You can save room for additional initiatives to take your ERP banking initiative to the next level.
Nuance, Anomalies and Headaches
Business applications like ERPs create a very complicated landscape. There are hundreds of applications in the market, each with their own issues regarding versioning, customizations and nuances in language and workflows.
If gathering requirements and constraints analysis is the biggest driver of cost and failure in software delivery, then navigating a project that adds many destination applications with their own complexity increases the chance for failure. A project team requires some familiarity with these systems, with accounting and treasury works flows in addition to the bank’s side of the program. These are not generally resources that would already exist at your bank. Not to mention that on top of the existing application development framework you use, our ERP adapter team has experience deploying a growing list of languages and frameworks used by the applications. In many cases the ERP will require your developers to be certified to build extensions to their application.
When working with FISPAN you are benefiting from hundreds of sprints worth of customer (Finance Departments) discovery, business analysis and hard-learned lessons. It has forced us to staff our whole organization with the right mix of technologists and business people to solve the different challenges in the stack.
Tooling, Agility and Cadence.
This may have left you scared of developing for a wide range of legacy ERPs and want to run a focused program against a few of the modern applications that tend to be more single tenanted, single versioned and cloud-based. That type of focus solves a lot of problems, but it highlights the other realities of a bank’s IT delivery program.
A more modern application takes advantage of those same factors in order to release products more often and more efficiently than legacy ERPs anywhere from twice a year to monthly. Simply preparing for these planned releases would challenge the delivery cadence of most internal development shops, but that’s only part of it. Consider unplanned changes in front of house vendors and how do you even detect them? And then, what about bank side changes and new functionality? What about the fear of anything in your code not knowing if it will accidentally break QuickBooks Online while adhering to a change?
Maintaining a functioning portfolio of these adapters will place additional pressure on a bank to modernize its DevOps tooling and delivery cadence. When banks ask what our secret is, we always point to the CI/CD Pipeline and the automated testing infrastructure we have invested in. Not only are we shipping weekly, but we are also testing each ERP application E2E across all the banking systems on each code commit, usually picking up unpublished changes or errors on both sides. FISPAN partner banks are taking advantage of our infrastructure testing and monitoring, developer environments and tooling for free.
This tooling is the required cost of offering a product such as FISPAN and is something you as a bank need to consider when deciding between building yourself vs. buying (working with a fintech partner).
Non Functional Requirements
Even if your business analysis nails the business objectives and customer experience, you should be aware this is a mission-critical application that will have large Nonfunctional requirements.
With FISPAN you’re not just purchasing the functional outcomes, but you are getting the whole Nonfunctional requirements platform as a package including multi-data center hosting, an operational and compliance program overseeing development in a SOC II, ISO 27002 and GDPR compliant manner. This eliminates headaches and marginal costs which makes the cost-of-ownership profile more attractive and forecastable over time.
Building is a Continuous Process
The excitement of building fades long before the bills stop rolling in for the obligation. These ERP adapter applications have a long lifecycle (similar to all banking software) but it introduces long term exposure to the variability of other software with the developer’s vendors of these ERPs. This creates a profile of long-term costs and makes it difficult to stop when you want to. We have developed a platform where banks can take our out-of-the-box offering, with bank connectivity and get up and running in- market quickly.